If I bought the Feb. 22.50 call tomorrow for .50 and the stock goes up a point will the option go to $1.00 or so even though it's experation day [or is it next week?] No wait, the first was a Fri. the 8th and tomorrow the 15th is the third Fri. Sorry, I have been traving the last few days and am fried. How does that work? Or does the question even make any damn sense. Thanks. Sleep deprived.
First, don't do it. To buy an option with only one day of life is very wreckless gambling. Many believe hedge funds attempt to close the stock's price on a strike price so that they can keep the premiums from puts and/or calls sold. Most options expire worthless, so often you are better off selling options. NVDA looks cheap here, and you can sell the Jun $25 calls for about $2.50. If the stock moves up to that range and gets called away when June options expire, you make $5 or so on a $22.50ish stock in only 4 months, a huge annualized return. I look for these situations and when added together, they can definitely boost your portfolio. A case can definitely be made for just holding the stock long as well.
Thank you for your lucid response. I usually sell calls as you suggested but I wasn't sure if options expire at the open or close on expiration day. I defininatly see the risk. I'd rather hope for a pull back in RIO or something similar that I feel is pretty stable for now, buy a few thousand shares, hope the stock rises a few points and sell some calls even a month out if the premiums look good.